The State is No Friend of the Worker - Reason.com

The State is No Friend of the Worker - Reason.com

The election season is upon us, and we're hearing the usual political promises about raising wages. Democrats pledge to raise the minimum wage and assure equal pay for equal work for men and women. Republicans usually oppose those things, but their explanations are typically lame. ("The burden on small business would be increased too much.") Some Republicans endorse raising the minimum wage because they think opposition will cost them elections. There's a principled stand.

In addressing this issue, we who believe in freeing the market from privilege as well as from regulation and taxes should be careful not to imply that we have free markets today. When we declare our opposition to minimum-wage or equal-pay-for-equal-work legislation, we must at the same time emphasize that the reigning corporate state compromises the market process in fundamental ways, usually to the detriment of workers. Therefore, not only should no new interference with the market be approved, but all existing interference should be repealed forthwith. If you omit that second part, you'll sound like an apologist for the corporatist status quo. Why would you want to do that?

The fact is that no politician, bureaucrat, economist, or pundit can say what anyone's labor is worth. That can only be fairly determined through the unadulterated competitive market process. Perhaps ironically (considering libertarians' individualism), it's a determination we make collectively and continuously as we enter the market and demonstrate our preferences for various kinds of services through our buying and abstaining.

If the market is free of competition-inhibiting government privileges and restrictions, we may assume that wages will roughly approximate worth according to the market participants' subjective valuations. This process isn't perfect; for one thing, preferences change and wage and price adjustments take time. Moreover, racial, ethnic, and sexual prejudice could result, for a time, in wage discrimination. (See Roderick Long's excellent discussion of the wage gap, "Platonic Productivity.")

The surest way to eliminate wage discrimination is to keep government from impeding the competitive process with such devices as occupational licensing, permits, minimum product standards, so-called intellectual property, zoning, and other land-use restrictions. All government barriers to self-employment — and these can take implicit forms, such as patents and raising the cost of living through inflation, or burdening entrepreneurs with protectionist regulation — make workers vulnerable to exploitation. Being able to tell a boss, "Take this job and shove it," because alternatives, including self-employment, are available, is an effective way to establish the true market value of one's labor in the marketplace. With the collapsing price of what Kevin Carson calls the "technologies of abundance" (think of information technology and digital machine tools), sophisticated small-scale enterprise — and the independence it represents — is more feasible than ever.